Half of organisations to freeze pay in 2010

Half of UK employees will have their pay frozen in the next year, while only a small minority can expect a rise above the rate of inflation.

Research by the CBI and recruitment firm Harvey Nash revealed that 47% of employers are planning to freeze pay altogether, while only 4% plan to make an inflation-beating rise.

John Cridland, CBI deputy director-general, said: “The worst of the recession may be over but firms remain ultra cautious about increasing pay. Market conditions continue to be very tough and growth in 2010 will be feeble, so pay is going to be squeezed for some time to come.

“As unemployment has risen, businesses and staff across the country have had to adapt to new economic realities. Pay cuts to preserve jobs are part of that reality. Given the alarming state of the public finances we must see similar pay restraint in the public sector.

“The new spirit of cooperation between employers and workers will be a real fillip for UK competitiveness as we return to growth, delivering more flexible working and a welcome improvement in the work-life balance.”

The survey of 243 organisations who employer a total of more than half a million people also showed that the use of flexible working has risen, with half of employers reporting encouraging more flexibility in the recession.

In particular, teleworking, or working from home, has soared in popularity, with two thirds (66%) of firms making use of it, 20% higher than the 46% recorded just last year. The rate of change is emphasised by the fact that only 11% of employers made use of this flexibility in 2004.

The statutory right for individuals to request flexible working continues to work well. Nearly all requests by parents (93%) and carers (94%) are being granted.